Canadian Manufacturing

Complaints abound about LCBO-Beer Store non-compete deal

Restaurants Canada, which represents 30,000 food-service businesses, has asked the Competition Bureau to review the deal

TORONTO—A national restaurant group has asked the Competition Bureau to investigate a non-compete agreement between the Liquor Control Board of Ontario and the Beer Store, claiming the deal restricts competition and inflates the price of beer in restaurants, bars and pubs.

Restaurants Canada also called Wednesday on the Ontario government—owner of the LCBO—to immediately cancel the agreement, which was first reported by the Toronto Star.

The Star reported December 9 that it obtained a 10-page document—signed by the LCBO and the Beer Store in June 2000—in which the LCBO agreed not to sell beer in packages of more than six containers. It also agreed not to sell to restaurants and bars any of the major brands not carried in its regular stores.

James Rilett of Restaurants Canada said the group has known of the existence of an agreement for years, but it “did not know the depth of the complicity.” He said a neutral party now needs to look into what he called a “sweetheart deal.”

The Competition Bureau confirmed Wednesday that it had received a complaint from the group and that it will review it.

Restaurants Canada, which represents 30,000 food-service businesses, said that in the past, the bureau had not been willing to wade into the issue, but the group believes the deal must be investigated now that it has been made public.

“The agreement can be terminated at any point, simply by giving six months’ notice. If the government were to cancel it today, Ontario consumers would be able to have better service and cheaper prices by the summer,” the group said.

The brewers’ association hit back, saying the allegations were false and inaccurate.

“Restaurants Canada’s claims that the Beer Store sets beer prices and that the LCBO/Beer Store framework agreement controls beer prices are both categorically false and misleading,” said Jeff Newton, president of Canada’s National Brewers.

He added that the Competition Bureau has had the agreement for a long time but never advised the Beer Store or its shareholders that it views the agreement as anti-competitive or that it is in any way contrary to the Competition Act.

“In short, the framework agreement is not relevant for matters pursuant to the Competition Act, a federal statute,” he said.

“It is well-known that matters with respect to the beverage alcohol industry are the exclusive jurisdiction of the provinces and not the federal government or the federal commissioner of competition.”

Newton called it an agreement designed to ensure the orderly and efficient expansion of the Ontario alcohol distribution industry.

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